From a range of 5.00-5.25 in second quarter 2017, price for W320 came down to 4.75-5.00 FOB by end Sep / early Oct 2017.

In Week 42, range of offers (with limited activity) has been W240 from 4.90 to 5.15, W320 from 4.75 to 5.00, W450 from 4.70 to 4.90, SW from 4.50 to 4.70, Splits from 4.40 to 4.60, Pieces from 3.65 to 3.80 FOB

Lower end of the range is for nearbys from small & medium processors who keep selling at whatever price they can because they need to have quick turnover + they cannot make forward sales.

In first half of 2017, prices reached historical peaks – about US$ 2450 for RCN and about US$ 5.25 for W320

GB / Senegal / Gambia RCN which had traded as high as US$ 2400-2450 C&F have come down to approx US$ 2200-2250

Indonesia RCN which was trading around US$ 2450 end Aug / early Sep is down to US$ 2350 per mt.

Tanzania RCN crop is reported to be good. Some pre-auction business has been down from US$ 2450 down to US$ 2350. First auction in Week 42 saw subdued interest. We have to see strength of processor demand and trader risk appetite in next 2-3 weeks to get indication of movement during the season.

Here are India & Vietnam statistics for last 3 years (Jan to Aug) :

2015 2016 2017

Vietnam Import 710,300 772,500 1,059,400

Vietnam Export 211,100 229,900 230,100

India Import 772,200 538,500 507,700

India Export 71,000 51,500 58,700

This shows (1) India share of imports continues to decline – big drop in 2 years (2) India exports in 2017 are better than 2016 but still significantly lower than 2015 (3) Vietnam is increasing both imports & exports (4) there was either a big drop in Vietnam crop or there is a big inventory in Vietnam (or there is an error in the statistics !!!)

Going forward, market trend for first half 2018 is very unclear.

Prices of Almonds, Walnuts, Pecans have increased from the low levels seen in 2016 / early 2017. Prices of some other nuts like Macadamia & Brazil Nuts are steady at the higher levels. Cashews are below the peak of mid 2017 and close to the average of 2016.

The increase in Cashew prices over the last 18 months (from Mar/Apr 2016) has been passed on to retail prices – partly in some markets and fully in some others (mainly Asia which is the biggest consumer). So far, there has not been any indication of big decline in off-take. It is not certain whether this trend will continue or change.

We do not see scope for any big decline from the current price range UNLESS there is a big fall in activity in kernels in last quarter 2017 as well as first quarter of 2018.

If that happens, processors will be slow in RCN buying leading to lower RCN prices. And if the 2018 Northern crops are normal, we could see a big drop in prices in second quarter 2018.

If there is moderate kernel activity in the next 2 quarters, we will probably see market move sideways in current range. Processors will need to keep buying RCN and this will keep prices steady. There could be a possibility of a dip to 4.50-4.75 range in second quarter of 2018 if Northern crops are good.

Any spurt in kernel buying in next 3-4 months would lead to a sudden jump in prices because processors would have to rush in to buy RCN. Prices could move up again to 5.00-5.25 range and stay there till 2018 crops are in full swing.

It is quite possible that some traders will sell at lower levels expecting reduction in demand leading to lower prices in 2018 but processors would be reluctant to take positions at lower levels at this stage. They will wait to get an idea of RCN price trend before making any large kernel sales for 2018 shipments.

Overall, situation is very uncertain and it is much tougher than normal to judge what the trend will be.

Regards,

Pankaj N. Sampat

SAMSONS TRADERS

Mumbai – India

Phone +91 98200 79015 / +1 415 881 0633

Email pankaj@samsons.co.in

]]>https://samsons.co.in/2017/10/23/cashew-market-report-22-oct-2017/feed/0pankajnsampatCashew Market Report – 14 Aug 2017https://samsons.co.in/2017/08/14/cashew-market-report-14-aug-2017/
https://samsons.co.in/2017/08/14/cashew-market-report-14-aug-2017/#respondMon, 14 Aug 2017 00:31:13 +0000http://samsons.co.in/?p=577More Cashew Market Report – 14 Aug 2017]]>By end June / early July 2017, Cashew Prices had come down from the peak of May 2017. For the last 4-6 weeks, market has been steady and there has not been much change in prices.

Current offers are in a wide range : W240 from 5.10 to 5.30, W320 from 4.85 to 5.15, W450 from 4.80 to 5.00, Splits from 4.35 to 4.60, LP from 3.75 to 3.95 FOB.

Most of the price decline has been in W240 & W320 from small and medium processors. Broken grades, on the other hand, have moved up and continue to be firm. The large processors have adequate sales and are not yet under pressure to make any big reduction in offers. Although their current offers are certainly below the peak of May 2017, they are still about 20-30 cents higher than the low end of the current range. And they are able to sell at these higher levels.

Since processors have paid very high prices for RCN this year, they will resist reducing kernel prices until they absolutely have to sell. Reflecting that, the current lower prices from small & medium processors are because they need sales to be able to continue buying RCN to keep factories running.

Demand from most markets has been steady despite the high prices. Reasonable volumes are being traded every few weeks. This is keeping the market steady within a range. Even now despite the relative quietness, there is some business being done for Oct-Dec shipments. It is not clear whether this buying is to fulfill old commitments or roasters are able to make new sales with current prices.

Indian demand has been slow for last several weeks. During May & June, wholesalers were not building stocks due to the new Sales Tax system coming into effect on 01 July. Fact that prices were are historic highs in May/June was additional reason not to build inventory. During July/Aug, people are getting rid of old stocks and getting used to the new system. Indian festivals start from Aug with the peak in mid Oct. We should have idea of how market reacts to the high prices by end Aug/early Sep.

If kernel demand picks up in Sep/Oct, prices will move up again… otherwise, we may see the market drifting slowly in coming weeks with a big decline possible only if there is a significant fall in demand for end of 2017 & beg of 2018 deliveries.

RCN prices have also come down from the peaks of May/June but that is mainly because (a) at the end of the season, kernel yields now are much lower (b) there is a bunching of shipments putting some pressure on the availability of funds in the chain. Most of the 2017 RCN has been bought by at very high levels. RCN prices in 2017 have been about 25% higher than 2016 and 50% higher than 2015 (and about 75% higher than the 5-7 years average !! ). At these historic high levels – never seen before – risks are very high.

During Oct to Mar, shellers will have to depend on Southern Crop (about 25% of World production) apart from the trader stocks of West Africa RCN. Since availability is small, there may not be much change in RCN prices unless there is a big fall in kernel demand in coming weeks. The next big move in RCN prices will happen only Feb/Mar 2018 when the Northern Crop starts.

If Southern crop RCN prices (last quarter of 2017) are significantly lower it will certainly have impact on the 2018 Northern crop. Lower RCN prices in last quarter is possible only if there is a significant decline in kernel demand in Sep-Dec 2017. If kernels continue to be bought at current levels till end of the year we do not see much chance of any decline till middle of 2018 (and that too, if the 2018 crops are good).

If roasters make good sales in coming months for first and/or second quarters of 2018, they will either have to buy now or go into 2018 with a short position. Both cases will lead to a strong RCN demand when 2018 season begins and prices will not come down.

Considering that prices of other nuts have been gradually moving up in the last few months from the lows of end 2016/early 2017, there may not be any big adverse affect on cashew contracting for 2018.

To my mind, a significant decline in prices – RCN or kernels – will happen only when there is a big drop in kernel demand. When and at what level and to what extent this will happen are very very difficult questions to answer !!

Until there is some indication of 2018 demand trend, it would be prudent for both shellers & buyers to be partly covered till first quarter 2018 because market could move sharply depending on what happens in last quarter of 2017.

]]>https://samsons.co.in/2017/08/14/cashew-market-report-14-aug-2017/feed/0psampatCashew Market Report – 01 May 2017https://samsons.co.in/2017/04/30/cashew-market-report-01-may-2017/
https://samsons.co.in/2017/04/30/cashew-market-report-01-may-2017/#respondSun, 30 Apr 2017 17:42:07 +0000http://samsons.co.in/?p=563More Cashew Market Report – 01 May 2017]]>In our last market report at beginning of 2017, we said that Cashew market seemed to be in a dark tunnel – 4 months later, there is still no light to show the end of the tunnel>

The expectation that prices would remain in the 4.00-4.25-4.50 range for most of the year has been belied. Beginning the year at 4.40-4.50, market has been going up a notch every few weeks.

In the last 2-3 weeks, prices have gone to highs never seen before. Even broken grades which were stagnant for several months moved up sharply. There has been good demand from all markets for May to July shipmnts with some buyers covering some quantity for later positions also.

Current levels are W240 from 5.35 to 5.50, W320 from 5.00 to 5.15, W450 from 4.75 to 4.85, Splits from 4.00 to 4.10, Pieces from 3.40 to 3.50 FOB.

Kernel buyers have not been buying long spreads expecting prices to soften – they have been buying every few weeks for 2-3 months ahead. This has meant that someone is always in the market and this is keeping the market firm.

The gradual and continuous price increase of 10-20 cents per month since Dec 2016 is causing concern. How long will it continue ? What impact will it have on usage and when?

There was a feeling that the price increase from 4.00-4.20 in July 2016 to 4.90-5.00 in Oct 2016 would lead to a big drop in demand. By end of 2016 (in less than 2 months) market fell to 4.40-4.50 and it seemed that this was happening.. But, in the last 4 months market has taken a U-Turn and surpassed the previous peak of 5.00 seen briefly in Oct 2016.

Information so far about the 2017 crops :

1) Cambodia & Vietnam crop are definitely adversely affected – some people say shortage could be in the range of 35 to 40% (approx 125-150,000MT).

2) African crops seem to be OK but kernel yields are lower. Usual logistic issues continue. Strong competition has meant that prices have been going up since beginning of the season.

3) Indian crop is OK but not much of a factor for kernel exporters as almost all of it is bought by small regional processors who cater to domestic market. Indian crop is only important when it is short because the small regional processors will need more imported RCN reducing the availability for exporting processors.

Current RCN prices range from US$ 1900 to US$ 2200 C&F India / Vietnam depending on origin, quality and business terms. These levels are about 30% higher than same time last year and about 10% higher than beginning of 2017 season.

Although this is peak collection period and kernel yields in new arrivals are reducing, RCN prices continue to move up. If RCN situation does not improve and prices do not come down in May, second half will be very difficult.

NOTE : In cost terms, each move of US$ 100 per MT of RCN = approx. US$ 0.20 per lb of kernels.

In the last 18 months, Cashew market has gone up 3.55-3.70 to 5.00-5.10. A gradual rise of over 35% with occasional small dips apart from a big 10% drop from 5.00 to 4.50 FOB (short lived) in Dec 2016. During these 18 months, each spurt has ended at a higher level. When and what will be the tipping point which will reverse this trend ?

Market movements are always uncertain but the current situation is scary !!

During last quarter of 2016, Cashew Market has been on a roller coaster – and that too, in a dark tunnel !

After moving in a narrow 3.30 to 3.60 range for most of 2015 (with a brief period in May / Jun 2015 when it moved up to 3.70 – 3.80 range), cashew price started moving up gradually since beginning of 2016.

During Jan to Apr 2016, the range was 3.50 to 3.80 which moved up to 4.00 to 4.25 in May to Jul and further to 4.25 to 4.50 in Aug to Oct. The last quarter saw the fireworks – up from 4.50 to 5.00 (never seen before) during Oct / early Nov, down to 4.75 by end Nov and further down to 4.50 by mid Dec. Average price for 2016 was 4.25 FOB (compared to 3.50 in 2015 and 2014 and 3.25 in 2013)

Looking at movements in 2016, we are reminded of 2008 and 2011 when we saw similar movements as follows :

2008 – In the first quarter, prices inched up from 2.65 to 2.95 FOB. Middle of the year, it jumped up to 3.60 FOB and drifted to 3.30 FOB by end of third quarter. In the last quarter, it crashed to 2.35 FOB. Average for 2008 was 2.975 FOB

2011 – After a relatively steady first quarter (3.80 to 4.00), market moved up to 4.30 in second quarter and further to 4.70 in Jul/Aug before drifting to 4.50 during Sep and crashing to 3.80 in the last quarter. Average for 2011 was 4.25

One big difference from these parallels is that 2016 ending price is (1) higher than 2016 opening (2) higher than 2016 average

During 2016, RCN price also moved around quite a bit. Starting around US$ 1500, price drifted to approx US$ 1200-1300 by March and then moved to US$ 1500-1600 during the main season. Touched a never seen before peak of US$ 2400 in Oct/Nov before coming down sharply to US$ 1900 by early Dec. Average RCN price in 2016 was approx US$ 1600 (compared to 1400 in 2015 and 1100 in 2014)

As we all know, it is impossible to have accurate figures of World Cashew production and consumption (especially Vietnam & India crops + India consumption). We have collated some figures which will give an idea of the trend. Assuming no change in India & Vietnam Crops and Africa / Brazil exports of kernels, summary of Jan to Nov (2016 vs 2015) figures is as follows :

6) This means Vietnam inventory up by 18.5K of kernels = 80K of RCN.. Inventory increase may be lower because general feeling is that Vietnam crop was smaller in 2016

7) Export of RCN down by 74K (India down 264.50 – Vietnam up 190.50). Considering that inventories in West Africa are almost NIL, this means that West Africa crop was probably smaller than 2015

8) Supply of kernels to importing countries more or less unchanged – 397K (300 + 97) in 2015 down to 393.50K (323.50 + 70) in 2016. This is despite increase in average price from 3.50 to 4.25. It is reasonable to expect that current retail prices reflect major portion of this increase (in Asia which is more than 50% of the World Market, price changes are reflected almost immediately)

After finishing the easy part (writing the 2016 review), we come to the Outlook for 2017… As we said at the beginning of this report, we seem to be in a dark tunnel (with no idea of where it ends. !!)

It is our feeling that major users are well covered for first quarter, partly covered for second quarter and sparsely covered for second half of 2017. Having seen very high prices in the last quarter, they seem to be waiting to see how prices move in first quarter before making additional purchases

The recent decline in RCN prices from US$ 2400 (abnormally high) to US$ 1900 is not enough.. To keep the kernel price near the 2016 average of 4.25, RCN prices need to come down quite a bit more. Unless that happens, processors will be reluctant to sell below current levels, specially if they are asked to take large positions for spread shipments

If kernel demand picks up in Jan, kernel prices will remain steady (or even go up a bit). This will mean that RCN prices at beginning of the 2017 crop will be around current levels

If kernel demand is quiet in Jan/Feb, processors won’t be in hurry to buy when 2017 crop starts and this could mean lower RCN prices. If processors are able to buy RCN at lower levels, they will start offering kernels at lower levels for shipment Mar onwards

Prices for SH of 2017 will probably be lower than current levels but it is difficult to say when it will happen & to what extent. If reasonable volume of kernels is traded in next few weeks for FH 2017 shipments, processors may continue to pay high prices for RCN at the beginning of 2017 crops. If RCN prices don’t come down significantly in early 2017, extent of decline in kernel prices may be restricted (and also it may happen later)

Considering everything, our feeling is that for most of 2017, kernel price will be in the 4.00-4.25 range with a reasonable possibility of short lived move below 4.00 at peak of the 2017 RCN season and a small chance of move to 4.50 (and maybe above) if demand is strong in first quarter

After 3 years of 3.25 & 3.50 average and 1 year of 4.25 average, the new “ normal “ will probably be 3.75 to 4.25 with “ comfort “ zone around 4.00 dollars

In the last 2 weeks, Europe & USA have been relatively quiet but West Asia has been active and prices moved up a bit more. Indian domestic market has seen a burst of activity in the last 2 weeks. Price of Splits & Pieces have gone up by 15 PERCENT !!!

In week 32, price range was W240 from US$ 4.35 to 4.60, W320 from US$ 4.20 to 4.40, W450 and SW320 from US$ 4.00 to 4.20, SW360, Splits & Butts from 3.25 to 3.40, LP from 3.15 to 3.25 and SP from 2.90 to 3.00 FOB (Note : differential between W240 + W320 is very narrow and differential between Wholes & Brokens is very large).

Overall, 2016 crop has been disappointing – reduction in quantity in some areas + reduction in kernel yield in almost all areas. RCN prices have been high throughout the season – in fact, they increased as season progressed. Current range for African RCN is from US$ 1450 to 1850 C&F India / Vietnam. Between 2014 crop and 2016 crop, there has been an increase of 25-30% in average RCN price. From now until March 2017, replacement availability is limited to about 25% of world production. So, there does not seem to be much chance reductyion in RCN price this year.

Although kernel prices are close to historical high of 4.60-4.70 seen in July 2011, most processors prefer to sell for nearbys (max 3 or 4 months forward). Of course, buyers also are not keen to take any large positions at these levels. This situation is likely to continue till Feb/Mar 2017 by which time, there will be some idea of 2017 crop prospects.

In first half of 2016, RCN imports into India were down by 175,000MT and imports into Vietnam were up by 26,000MT – net decrease of almost 150,000MT.

In the same period, kernel exports from India were down by 14,000MT (approx 56,000MT of RCN) and exports from Vietnam were up by 14,500MT (approx 58,000MT).

This means that during Jan-Jun 2016 (1) kernel supply to importing markets was almost the same (2) kernel supply to Indian market was substantially lower (3) inventory was drawn down substantially in India and marginally in Vietnam.

A logical conclusion is that unless RCN imports in July-Oct are substantially higher, overall kernel availability in 2016 will be lower than 2015.

In our last report (end of May 2016), we were talking about possibility of a slight dip in prices in third quarter if supplies improved but that does not seem likely for the time being. Now, we can expect prices to remain firm around the current levels for rest of the year (and maybe even move up a bit more if spot demand continues to be strong after Oct). The only reason for a decline would be if activity in Sep/Oct for first quarter & first half 2017 deliveries is lower than normal due to reluctance of buyers to take large positions.

At the same time, there does not seem to be reason for a further big increase in cashew prices which are close to the short lived historical high of July 2011. Especially when prices of other nuts which were high & firm in the last 2 years are lower & softer this year. As has been said earlier, there is an unspoken fear that if the prices go up too much, it could seriously impact demand. It could take a long time to regain lost interest.

To sum up, we see market moving sideways with a firm undertone in the coming weeks. Hopefully in the last quarter we will get some indication of 2017 prospects depending on activity in the kernel market in the next 8-12 weeks. At the moment, the only thing that we can say with reasonable confidence is that prices in 2017 will certainly be higher than the 3.25-3.50 range that we saw for a almost 4 years (from beginning of 2012 to end of 2015). The new “ normal “ could probably be 3.75 to 4.25 with “ comfort “ zone around 4.00 dollars.

The Cashew Market has been at a cross-road for most of May, waiting to see which signal turns green – right or left !!

In a market that has been very quiet, offers (and some trades) in Week 20 and 21 have been in the range of W240 from US$ 4.25 to 4.45 / W320 from US$ 3.95 to 4.15 / W450 from US$ 3.85 to 3.95 / Splits from US$ 3.25 to 3.40 / Pieces from US$ 3.00 to 3.15 FOB for shipments upto Sep/Oct.. No business reported for later positions but as usual, offers for far forwards are few cents higher than current range.

Let us have a look at what has happened so far in 2016 :

– Jan & Feb were quiet. Supply situation was comfortable. Buyers were able to buy required volume without difficulty. Although sheller margins were under pressure since mid 2015 because 2015 RCN prices were higher than 2014, they were not able to increase kernel prices due to comfortable situation. They were just able to make both ends meet by selling for nearbys at prevailing prices. Prospects for 2016 crop were looking okay and there was no reason for buyers to consider covering forwards at the higher levels that are usually asked by large processors for later positions.

– On Feb 29, Government of India announced an Import Duty of approx 10% on import of RCN. There are some schemes for refund, exemption etc but overall this makes life difficult for Indian processor and adds to cost of doing business. It was expected that this would lead to softening of RCN prices. On the contrary, RCN prices started moving up from middle of March !!!

– Immediate cause for increase in RCN prices was that arrivals were slower and later than expected raising concern about the size of the crop. Reports of lower out-turn at the beginning of the season in most areas added to the fears and induced continuous buying at increasing prices.

– Late arrival of RCN meant reduced processing in Feb & Mar resulting in tightness of kernel availability + delays in kernel shipments to USA & Europe. Buyers were forced to pay higher prices to secure supplies to meet delivery commitments for 2nd quarter. Added to this was the apprehension of lower kernel availability through 2016 due to short crop + lower out-turn. This fuelled spiral of one price increase leading to another.

– Between mid-March to early-May, W320 moved up from range of 3.55-3.75 to 4.05-4.20. Most of the business during this price rise was for nearbys but some “ caution “ buying was done for later positions also.

– During May, market is taking a breather. Prices for RCN as well as kernels have come down a bit – not much. Waiting for trigger to be pulled to make a move.

Now, a look at what we can expect in the coming weeks :

– It appears that although the crop is adversely affected, the impact may not be as bad as feared. In most regions, volumes may be same as last year while some regions may see reduction of 10 to 20%. Although there are reports of some higher out-turn stocks showing up in some regions, average out-turn is definitely going to be lower. We are seeing a trend of reducing yields in many origins since last 3-4 years and this needs to be watched in coming years

– RCN prices have come down from the peaks of April 2016 but are still high compared to 2015 average and much higher than 2014 average. So, it would not be realistic to expect any significant decline in kernel price although we might see a dip from current levels when supplies pick up in 3rd quarter. Dip cannot be large because the high price paid for RCN will not allow shellers to sell at much lower levels.

– At the same time, we don’t see much chance of any big jump in prices. There is an unspoken fear that if the prices go up too much, it would seriously impact demand leaving the hot potato in the hands of the most vulnerable parts of the chain (shellers and RCN traders / growers).

– As RCN arrivals into India & Vietnam are picking up from May, shellers will need to keep selling on a regular basis. Similarly, there will be a need for continuous buying as many of the buyers do not have any significant cover for Sep/Oct forwards. Also, Aug-Nov/Dec is the peak consumption period in most markets (especially the biggest consumer – India – which is a “spot” market)

– Like many other commodities – and specially tree-nuts – we feel that we will see cashews moving up to a higher than historical price range. After having moved in a 3.00 to 3.50 range for a long time, the new “ normal “ could probably be 3.75 to 4.25 with “ comfort “ zone around 4.00 dollars.

– The next 6-8 weeks will give us a fairly clear picture of availability for the next 6 to 9 months and the average in-shell cost. What happens with kernel prices in Aug/Sep will have an important bearing on off-take for last quarter of 2016 and first half of 2017.

Would appreciate your thoughts on the current situation and prospects going forward.

During Week 14, business was done for W240 from 3.90 to 4.00 and W320 from 3.70 to 3.80 FOB for Apr May Jun shipments. Not much business reported in other grades.

Levels now (Week 15) are W240 3.95 to 4.10 / W320 from 3.75 to 3.95 / W450 from 3.60 to 3.75 / SW320 from 3.50 to 3.65 / Splits from 3.20 to 3.35 / Pieces from 3.05 to 3.15 FOB. More enquiries but limited activity.

After opening high, RCN prices started moving down by end Feb. With introduction of import duty on RCN in India, people were expecting further softening. Surprisingly, RCN prices started moving up again from middle of Mar. For instance, IVC (largest crop in Africa) which had gone below US$ 1300 has moved up to US$ 1500 (an increase of nearly 15% in one month !!). For comparision, IVC RCN traded in the range of US$ 1150 to 1300 during 2015.

Arrivals are late in many areas – there is concern that crop may be short in some areas. Clear picture on quantity will be available only by end May or early Jun. One thing is certain – kernel yields per ton of RCN (in-shell) from almost all origins are lower than normal.

Following the increase in RCN prices, the kernel market which has been steady for a very long time started moving up. Prices have been going up few cents every week from middle of March. Due to the delay in crops and reduced buying by Indian processors, kernel availability in Apr to Jun will be reduced. This expectation coupled with some delays in Feb Mar shipments from Vietnam induced USA & EU buyers to come in and pick up all offers for nearby shipments. Some buyers are covering for third quarter also.

Activity this week has been limited because there is apprehension about what will happen in coming weeks. Buyers are reluctant to pay higher levels because they don’t know whether crop concern is exaggerated (and whether demand will be affected if prices remain high). Shellers are reluctant to sell any large volume because they don’t know how crops will develop in coming weeks and what will happen to RCN prices.

Current RCN prices are very high – processors margins which have been under severe pressure have moved to negative territory for most processors. As a result, many processors have reduced processing. If the RCN prices don’t come down significantly or kernel prices don’t move up a bit more, processors will not be able to buy as much RCN as they normally would. This will keep kernel supplies tight for few months more until there is parity between RCN & kernel prices.

Kernel off-take has been good in all markets and if prices do not go up too much, we can expect trend to continue. There may be a tipping point beyond which there could be a decline in off-take. The questions are : what is that point and will we reach it ?

After a long period of stable prices + sufficient margins + steady growth, it seems that this year will be different + difficult + dangerous.

For better understanding of the market, would appreciate your comments on the current situation + your views on demand prospects + market trend and any other information

Although this may not have any significant impact on the cashew kernel market, it will make things difficult for Indian shellers who are already burdened with high processing costs and lower RCN availability. Impact will be more for those catering to domestic market but exporters will also be adversely affected as it is not easy to operate under Duty Refund / Duty Exemption schemes. Strong efforts are being made for re-consideration but outcome is uncertain.

Current kernel prices are W240 from 3.75 to 3.95, W320 from 3.50 to 3.70, W450 from 3.45 to 3.55, Splits from 3.10 to 3.25, Pieces from 2.90 to 3.10 FOB

Crop is late in many origins. Arrivals are slow, but expected to pick up by end of March. If rains are also delayed, crop size will not be affected.

RCN prices have come down a bit from the high levels of Jan/Feb but are still not in parity with kernel prices. As we mentioned in our report of 13FEB2016, RCN prices in Jan/Feb 2016 were about 10% higher than 2015 average which was already 15-20% higher than 2014 prices.

If RCN prices don’t come down or kernel prices don’t move up, shellers will be reluctant to buy any large volume of RCN. Their margins were under pressure during 2015 as there was no commensurate rise in kernel prices (margins will be non-existent or negative with present prices). Note : If there is no reversal of import duty, Indian processors buying ideas will have to be still lower !!

On the kernel side, the market has been very steady during Jan/Feb and continues to be so in March. Some business is being done in all markets but off-take is slow and there is resistance to offers at higher levels. Some buyers seem to be well covered for next few months. Some others who need to buy do not think it necessary to pay premium for forward cover – they are content to buy nearbys.

Looking at recent decline in prices for others nuts, there is a feeling that cashew prices should also soften. Cashew prices did not go up when prices of other nuts went up in the last 2 years. They have been moving within a very narrow range for the last 4 years despite a significant increase in RCN prices in last 2 years. We cannot expect any decline from current kernel price range unless RCN prices come down to 2014 levels (at least).

Although outlook for 2016 supply looks comfortable, there could be squeeze in kernel supplies for few weeks due to late crops and reduced RCN buying by shellers if disparity continues. For some reason, if RCN prices don’t come down to reasonable levels, we could see a difficult market in second half of the year>

]]>https://samsons.co.in/2016/03/13/cashew-market-report-13-mar-2016/feed/2psampatCashew Market Report – 13 Feb 2016https://samsons.co.in/2016/02/14/cashew-market-report-13-feb-2016-2/
https://samsons.co.in/2016/02/14/cashew-market-report-13-feb-2016-2/#commentsSun, 14 Feb 2016 06:07:52 +0000http://samsons.co.in/?p=462More Cashew Market Report – 13 Feb 2016]]>
During January, cashew market was very steady with reasonable activity in all markets. Business was done for W240 from 3.80 to 3.90 and W320 from 3.55 to 3.65 FOB for nearbys with some processors being able to sell higher to their regular buyers.

Current price levels are W240 from 3.85 to 4.00, W320 from 3.55 to 3.70, W450 from 3.45 to 3.60, SW320 from 3.40 to 3.50, Splits from 3.20 to 3.35 and Pieces from 3.00 to 3.15 FOB.

Northern crop collection will start in Feb & Mar in different countries. So far, indications are that crops will be good although arrivals may be delayed in some places. Opening prices were high in the range of US$ 1450 to 1550 (now down to US$ 1400 to 1475) compared to US$ 1150 to US$ 1300 in 2015. As mentioned earlier, the 2015 prices were already 20-25% higher than 2014 !!

Although these RCN prices are not workable with current kernel prices, processors may be forced to pay the higher prices for early arrivals because they don’t have enough RCN to process.

If kernel demand / prices don’t pick up in Feb/Mar, RCN buying interest may soften in Apr when arrivals are at peak. This could mean lower RCN prices if last year’s phenomena of competition amongst large number of traders (many non-traditional) is not repeated.

Although there has been reasonable kernel demand in the last few weeks, there is certainly a resistance to higher offers. Very limited business is being done when processors ask for higher prices – even when they are taking risk of selling forward.

There has been good growth in cashew usage in all markets during 2015 and if prices don’t move up too much, this trend should continue.

With reduction in prices of other treenuts, there is an expectation that cashew prices should come down as well. BUT, it must be remembered that for almost 3 years, cashew prices have been fairly stable in a narrow range whilst prices of other nuts zoomed up to very high levels. Also, the increase in RCN prices has reduced sheller margins. In some cases, shellers have been forced to shut plants because of the disparity.

Our feeling is that unless the RCN prices come down substantially, there is not much chance for reduction in kernel prices. If RCN prices do not come down and kernel prices do not move up, there is possibility of some period of reduced processing leading to tightness in kernel availability even though RCN supply may be adequate – time & place issue.

Overall, we don’t expect any major change in kernel price range in 2016 but there could be some volatility during Feb to Apr depending on crop news (including rumours).

To begin, our best wishes to you and yours for a healthy 2016 filled with tons of success and joy – at work & in personal life.

During Nov/Dec 2015, cashew market was very steady. Reasonable volume was traded to all markets without much change in prices.

Current price range is W240 from US$ 3.75 to 3.90, W320 from US$ 3.50 to 3.65, W450 from US$ 3.40 to 3.50, SW320 from US$ 3.35 to 3.45, SW360 from US$ 3.25 to 3.35, Splits from US$ 3.2- to 3.35 and Pieces from US$ 3.00 to 3.15 FOB’

As we move into 2016, here is a chart of Cashew Kernel prices during 2014 and 2015 :

MONTH W240 W320 W450 SPLITS PIECES

JAN 2014 3.65-3.85 3.30-3.45 3.00-3.10 2.25-2.40 1.55-1.65

APR 2014 3.50-3.70 3.10-3.30 2.95-3.00 2.40-2.50 1.65-1.75

JUL 2014 3.60-3.75 3.20-3.40 3.10-3.20 2.50-2.65 2.00-2.25

OCT 2014 3.90-4.10 3.60-3.70 3.35-3.45 2.90-3.05 2.75-2.95

DEC 2014 3.65-3.85 3.35-3.50 3.15-3.30 2.85-3.00 2.80-2.90

JAN 2015 3.70-3.85 3.30-3.50 3.00-3.10 2.85-2.95 2.75-2.90

APR 2015 3.65-3.85 3.40-3.60 3.15-3.25 2.95-3.10 2.85-3.00

JUN 2015 3.75-3.95 3.50-3.75 3.45-3.55 3.30-3.45 3.10-3.20

JUL 2015 3.65-3.85 3.45-3.65 3.45-3.50 3.20-3.35 2.95-3.10

OCT 2015 3.60-3.70 3.45-3.60 3.35-3.50 3.10-3.25 2.90-3.00

DEC 2015 3.75-3.90 3.50-3.65 3.35-3.50 3.20-3.35 2.95-3.10

Some observations :

1) At any time, there is a difference of 15-20 cents per lb between the highest & lowest offer, depending on delivery period & category of supplier (in terms of quality, food safety, reliability, consistency)

2) For the last 2 years, prices have been moving sideways in the range of 3.30-3.60 excecpt for 1 dip below the range in APR-JUN 2014 and 2 spikes above the range in OCT 2014 and MAY/JUN 2015

3) Differentials between grades has narrowed in last 2 years. This narrowing is very, very significant in the case of Brokens. Differential between W240 and W320 narrowed from 40-50 cents to 20-25 cents. Differential between W320 and Splits married from 1 dollar to 30-35 cents. Differential between Splits & Pieces narrowed from 60-70 cents to 15-20 cents

4) Cashew kernel prices have been moving in current range for last 3 years. This stability in a period when there have been significant changes in prices of other nuts has to reasonable steady growth in usage in all markets. This trend is likely to continue as there is not much chance of any big price movement unless something dramatic happens on supply side (positive or negative). Recent reduction in prices of other nuts may have some impact of the change is sustained and no terraced.

5) Production in West Africa continues to grow. There has been hardly any growth in other areas. Million dollar question is : What will be the tipping point for processing in Africa to become an important factor in the kernel market ?

6) During 2015, price of RCN (in shell) was low in Feb/Mar before beginning of the Northern Crop (which accounts for over 75% of World production). Prices moved in Apr/May when trading volume was at peak and came down a bit in Jul/Aug. Prices moved up again n Sep-Nov (when Southerrn crop was being traded) and eased bit in last 2 weeks,.

7) On an average, RCN prices in 2015 were about 25% higher than 2014 but there was almost no change in kernel prices. This is putting pressure on processor margins. Many large processors have not bought their usual volumes in the Southern Crop

In last few years, there has been a significant shift on both sides of the Chain – supply & demand. India is no longer the largest supplier to World market – that position has been taken by West Africa for RCN and Vietnam for kernels. On the demand side, USA & EU continue to be large buyers but they have been overtaken by Asia which is now the largest consuming region (India is the largest consuming country). This has altered market dynamics – relative power of each region to determine market trend has changed. Activity in many more origins and markets influence the price.

Looking at current situation, our feeling is that we will see some volatility in the first quarter. Kernel prices could move up a bit before 2016 crops begin if there is good demand in Jan/early Feb. If that happens, RCN prices will not come down below 2015 levels. If kernel demand in Jan/Feb is not very strong and if 2016 crops are very good (too early to judge or guess now), it is possible that RCN prices could dip a little in Mar/May.

Would appreciate your comments + views on developments & trends on both sides of the chain for a better understanding of market prospects.

]]>https://samsons.co.in/2016/01/02/cashew-market-report-01-jan-2016/feed/2psampatCashew Market Report – Sep 16, 2015https://samsons.co.in/2015/09/16/cashew-market-report-sep-16-2015/
https://samsons.co.in/2015/09/16/cashew-market-report-sep-16-2015/#respondWed, 16 Sep 2015 13:41:50 +0000http://samsons.co.in/?p=437More Cashew Market Report – Sep 16, 2015]]>After a very steady May/June, cashew prices came down a bit in July / early August. Some processors at low levels whereas others were able to sell at higher levels. Reasonable volumes were traded at all levels.

In Weeks 37 and 38, range of prices has been W240 from 3.60 to 3.80 / W320 from 3.45 to 3.65 / W450 from 3.40 to 3.55 / WS from 3.15 to 3.30 / LP from 2.95 to 3.10 FOB. Forwards are trading at a premium of 5-10 cents per lb depending on processor & shipment period. Differential between lowest & highest price on a given day has increased from 5-10 cents to 15-20 cents !!

In the last couple of weeks, there are more enquiries but volume traded has been small as there are very few sellers at lower levels. If this trend continues, it is quite possible that price may move up gradually in coming weeks.

RCN prices came down end July / early Aug due to bunching of arrivals but not much was traded as most processors had adequate arrivals of their own. In last 2-3 weeks, prices have inched up a bit as medium & small processors started buying in small lots. Current RCN prices are in the range of 1350-1450 for IVC / Benin and 1550-1650 for GB / Senegal / Gambia depending on the quality. Except for IVC which reportedly shipped a record quantity, shipments from other West African origins were slightly lower than last year. Outlook for upcoming Southern crop is hazy – some people say Brazil may have a good crop and Tanzania movements may be delayed due to elections. Small lots of Indonesia are trading at insanely high prices.

On an average, RCN prices in 2015 have been 20 to 25% higher than 2014 whereas kernel prices have been almost the same (maybe 5% higher). Between now and Mar 2016, RCN availability will be from Indonesia, East Africa, Brazil which account for only 25% of World production. Traditionally, Southern crop prices are higher than Northern crop. Only reason for decline in Southern crop this year would be if kernel activity in Sep-Nov is very very slow.

Although kernel buying interest was reasonable but not very strong in the last 3 months, prices were steady in a narrow range and forwards were trading few cents higher at all times. This seems to indicate that below a certain level, selling interest is limited. High RCN costs and regular buying interest from some market or the other are providing a floor to the market.

During first half of 2015, there has been reasonable growth in usage in all markets and this trend should continue unless something dramatic happens.

Current uncertainty in economic situation makes it difficult to judge demand and market trend in coming months.

Overall, we don’t expect much change in market in coming weeks but there is certainly a possibility that prices could move up a bit if there is a good demand for year-end top-up requirements and first half 2016 shipments. We would not be surprised if prices cross the higher end of the range seen in the last 6 months. There are very little chances of decline from current levels in the foreseeable future.

We would appreciate your comments on the market situation and your views + forecast of demand and price trend in coming months.

]]>https://samsons.co.in/2015/09/16/cashew-market-report-sep-16-2015/feed/0psampatCashew Market Report – May 19, 2015https://samsons.co.in/2015/05/20/cashew-market-report-may-19-2015/
https://samsons.co.in/2015/05/20/cashew-market-report-may-19-2015/#respondTue, 19 May 2015 19:41:53 +0000http://samsons.co.in/?p=430More Cashew Market Report – May 19, 2015]]>The last two months have seen a sea change in sentiment in the Cashew Market. There has been a significant increase in prices after a very long period of the market moving sideways in a narrow range.

Currently – middle of May 2015 – range of prices is W240 from 3.80 to 3.95, W320 from 3.55 to 3.75, W450 from 3.40 to 3.50, Splits from 3.15 to 3.25, Pieces from 3.00 to 3.15 FOB with hardly any offers at the lower end of the range.

An interesting phenomena has been the narrowing of differentials between grades. Premium for large wholes and discount for lower grades has narrowed significantly. Demand for large wholes is limited. Availability of lower grades is very tight. In fact, in the Indian domestic market, Splits and Pieces are trading at prices higher than international market for some Whole Grades (this has happened after several years).

Until middle of March, everybody was expecting that Cashew Market in 2015 would be a continuation of what we have seen since the second half of 2012. Crop prospects were looking okay. RCN traders were willing to make sales at reasonable price in line with kernel market. Shellers were not keen to buy because the season was just beginning. Kernel buyers did not feel need to lock in volume for long spreads in a market which was going nowhere. There was nothing on horizon pointing to any major change in prices or market trend.

In the RCN market, things started to change by middle of March. There were reports of lower kernel yields in many areas. Delays in shipments and fears of further reduction in yields in later arrivals forced shellers to pay higher prices to secure supplies of early arrivals.

This is one of the years in which RCN prices have been going up during the peak harvesting period of the Northern crops which contribute 75% of the World Production. In previous years when this has happened, there have been reasons like definite short crops or movement issues due to disturbances in growing areas. This year is a mystery !!!

One thing which is different this year is the increase in number of RCN traders (also shellers). Although the quantity each new player will or can buy is not large, the cumulative effect has lead to more competition in RCN buying leading to people paying prices which are totally out of whack with kernel prices. Traditional players are forced to follow the market to meet their requirements.

On the kernel side, availability was comfortable in the first quarter. Buyers were able to get what they needed. There was no pressure to pay higher levels to lock in supplies for forwards. By end Mar/early Apr, offers started becoming scarce. With the delays in RCN shipments and increase in RCN prices, shellers were reluctant to make new sales and started increasing kernel offers. Some buyers who needed product for second quarter started paying higher prices and this prompted some business for second half at a small premium. Today, even those premium prices seem low !!

In the last 2 months – from middle of March to middle of May – RCN price has gone up by 250-300 dollars per ton which is equal to 45 to 55 cents per lb of kernels. In the same period, kernel prices have gone up by about 20-30 cents. This leads us to believe that unless there is a big decline in RCN prices, shellers will not be able to reduce kernel offers.

What can we expect in coming months ?

Given the fragmented production base, it is impossible to say what the crop is until major portion of the African crop is shipped. Since shipments are slow, we will have a reasonable idea only by Aug. One thing is more or less certain, kernel yields are lower in almost all African origins. If shipments pick up in May/Jun, RCN prices could come down a bit. But that may not be enough to compensate for decrease in yield.

We expect kernel availability to be lower than normal in May/Jun. Hopefully, things will be better after July but by that time, buying will be at its peak in Asia (including the largest consumer – India – which is predominantly a “ spot “ market). In the third quarter, we can also expect some buying from importing countries to fill uncovered positions for 2015 and some portion of early 2016 requirements.

Next few months will be interesting. There are several factors which will determine the Cashew Market trend i. e. RCN prices, roaster & retailer strategy, trends in other nuts, general economic situation in the main importing countries and currency movements.

In our JAN 2015 analysis of Cashew price movement for 10 years, we saw that prices moved in the following ranges (except for the aberrations in 2008 and 2010/2011) :

2.00 to 2.50 from 2005 to 20072.50 to 3.00 from 2008 to 20113.00 to 3.50 from 2012 to 2014

At any time, it is dangerous to predict what will happen in a market (for anything). Specially for our “crooked” nut (!!) at a time when supply position is not very clear. But based on a gut feeling we are willing to hazard a guess that in coming months, price for W320 will tend toward the middle or higher end of the 3.50-4.00 range with very little chance of it going below 3.50.

We would appreciate your comments on the market situation, supply side factors, usage prospects and your views + forecast of demand and price trend in coming months.

]]>https://samsons.co.in/2015/05/20/cashew-market-report-may-19-2015/feed/0psampatCashew Market Report – April 5, 2015https://samsons.co.in/2015/04/06/cashew-market-report-april-5-2015/
https://samsons.co.in/2015/04/06/cashew-market-report-april-5-2015/#respondSun, 05 Apr 2015 19:44:51 +0000http://samsons.co.in/?p=422More Cashew Market Report – April 5, 2015]]>After a very quiet Jan/Feb, there was reasonable activity in Cashew Market during March 2015. Most of the business was for shipments upto May/Jun but some business was done for shipments in second half of 2015.

During March 2015, cashew kernel price range – depending on the processor and shipment period – has been W240 from 3.65 to 3.85, W320 from 3.40 to 3.60, W450 from 3.15 to 3.25, SW320 from 3.25 to 3.35, Splits from 2.90 to 3.10 and Pieces from 2.85 to 3.00 FOB.

In the last 2-3 weeks, prices for WW320 and SW320 have moved to the higher end of the range with hardly any offers near the lower end of the range.

Broken grades continue to be tight as yield per ton of RCN has come down to normal levels (and below normal for more efficient shellers) and usage (especially in Asia) has gone up.

In the first quarter of 2015, Indian shellers have been served a double whammy. First, a huge wage increase in Kerala which has made processing in Kerala very uncompetitive. And this week, a reduction in duty credit from 5% to 2% of FOB value for all exports after 1st April.

Northern Hemisphere crops – accounting for 75% of the World Production – are currently being harvested. Crops are expected to be okay in most areas. There is concern about lower quantity in some areas and lower kernel yields in some others. Also, there is concern that logistic issues in some countries will delay the movement of RCN to Vietnam and India.

RCN prices were trending lower in February on expectation of good crops but started moving up from middle of March due to slow arrivals and reports of quality & logistic issues in some origins. Currently, India & Vietnam RCN are trading in the range of US$ 1450-1500. Prices from West Africa are in the range of US$ 1100-1300 C&F depending on origin, quality, shipment period, payment terms.

In the last few years, there has been a power shift on both sides of the cashew market – supply and demand. India is no longer the largest supplier to the world market – that position has been taken by Vietnam for kernels and West Africa for RCN. On the demand side, USA & EU continue to be large buyers but they have been overtaken by Asia which is now the largest consuming region (India is the largest consuming country). This has altered the market dynamics – relative power of each region to determine market trend has changed. It is now much more a spot & nearby market. Activity in many more origins and markets influence the price than in the past.

Reflecting this, many buyers in the 2 major importing regions – USA & EU – have changed their buying pattern. The regular buying for shorter periods has meant continuous spread out demand which reduces the volatility in prices. But it also makes the supply chain vulnerable to any sudden spurt in demand or distortions in supply. Another change has been the difference in approach of buyers to issues like vendor inspections for factory hygiene & food safety, quality control, traceability, etc. This has lead to a 2-3 tier market with a difference of over 5% in prices for the same grade from different processors.

As discussed in earlier reports, the long period of stability in cashew prices – more than 2 years now – compared to the upward trend in prices to other nuts has resulted in increase in usage in all markets. This trend is likely to continue as there is nothing on the horizon for a big move but a gradual increase is quite possible. The weaker Euro might have some impact on usage in Europe in the medium term but there is a strong chance that cashew might not be as badly affected as other nuts because it continues to be a “value” nut.

Looking at the trend, we feel that spot and nearby demand will continue during Apr/May. If RCN prices do not come down, shellers will not be able to reduce kernel offers. This may lead to kernel buyers taking increased cover for the busy period of the year (as very little has been traded so far). This could lead to a firming up of prices for second half of the year. The only reason for market going down to the lower end of the current range would be lower RCN prices (relative to quality) and smooth RCN movements in the second quarter of 2015.

During 2014, we have been very irregular with our reports – main reason being that for most of the year, cashew market has been so quiet that it has been difficult to find something to write about !!!!

To start 2015, we thought we would attempt an analysis of how the cashew market has moved in the last 10 years… And this is the result of our efforts :

2005 – Prices moved within a narrow range of 2.55 to 2.35 FOB for most of the year and dropped to 2.10 FOB in the last quarter of the year. Average for 2005 was 2.325 FOB with a trading range of 21%

2006 – Throughout the year, prices moved in a very narrow range of 1.95 to 2.10 FOB. Average for 2006 was 2.05 FOB with a trading range of 7%

2007 – For most of the year, market was in 2.05-2.20 FOB range and moved up quickly to 2.65 FOB in the last quarter. Average for 2007 was 2.35 FOB with a trading range of 29%

2008 – This was an exceptional year (to say the least). In the first quarter, prices inched up from 2.65 to 2.95 FOB. Middle of the year, it jumped up to 3.60 FOB and drifted to 3.30 FOB by end of third quarter. In the last quarter, it crashed to 2.35 FOB. Average for 2008 was 2.975 FOB with a trading range of 53%

2009 – In the first quarter, market was stable around 2.30 FOB and moved up to 2.60 FOB in the second quarter. It was stable in the third quarter between 2.60-2.70 FOB and moved up to 3.00 FOB by end of the year. Average for 2009 was 2.65 FOB with a trading range of 30%

2010 – Market was volatile in the first quarter – moved from 2.90 to 2.60 and back to 2.90 FOB. In the second quarter it was moving around 3.00 FOB. Prices moved up to 3.40 FOB at end of third quarter and 3.80 FOB by end of the year. Average for 2010 was 3.20 FOB with a trading range of 46%

2011 – This was another landmark year for the Cashew trade. After a relatively steady first quarter (3.80 to 4.00), market moved up to 4.30 in second quarter and further to 4.70 in Jul/Aug before drifting to 4.50 during Sep and crashing to 3.80 in the last quarter. Average for 2011 was 4.25 with a trading range of 25%. As we said in one of our reports in 2010/11, the Cashew market was in uncharted waters (probably in the Bermuda triangle !!)

2012 – After 2 years of a roller coaster ride, cashew market took a breather in first half of 2012 trading around 3.50 FOB except for a short lived uptick to 3.75-3.85 FOB in May. Market started drifting downwards from mid/late Jun and was around 3.10 FOB at the end of the year. Average for 2012 was 3.35 with a trading range of 22%.

2013 – A year in which prices moved sideways. Market started the year around 3.30 went up to 3.50 in second quarter and closed the year at 3.35. Average for 2013 was 3.40 with a trading range of 6%

2014 – was more of the same with a slight up-tick in third quarter followed by unprecedented quiet in the last quarter. Market started the year around 3.30 and traded in the 3.30-3.50 range for most of the year except for a very very brief period in Sep/Oct when business was done around 3.70. Average for 2014 was 3.50 with a trading range of about 12%.

Summary of analysis :

Year

Low

High

Average

Range

2005

2.10

2.55

2.325

21%

2006

1.95

2.10

2.05

7%

2007

2.05

2.65

2.35

29%

2008

2.65

3.60

2.975

53%

2009

2.30

3.00

2.65

30%

2010

2.60

3.80

3.20

46%

2011

3.80

4.70

4.25

24%

2012

3.10

3.80

3.35

22%

2013

3.30

3.50

3.40

6%

2014

3.30

3.70

3.50

12%

Attached Excel Sheet which has gradewise prices on monthly basis from 2005 to 2014 will be an useful resource for further analysis.

A) First observation is that there is NO PATTERN – annual or seasonal – for Cashew price movements !!

From 2005 to 2007, kernel prices were stable / soft during second and third quarters when Northern Hemisphere crops are harvested – this is logical because these crops contribute nearly 75% of the world production.

2008 was an exceptional year when the trading range was 53%. Prices jumped about 25% in few weeks in second quarter (during the peak harvest season) due to delays & defaults and crashed by over 30% in few weeks in last quarter due to the global financial crisis.

In other 6 years, kernel prices moved up (or were at least steady to firm) during the Northern Hemisphere crops

B) In most of the years, trading range has been 20 to 30% (except for 2008 – 53% and 2010 – 46%). Last two years (2013 & 2014) have been the longest period when trading range was around 10% (exception was 2006 when trading range was 7%).

C) The rally in kernel prices from 2.70 in March 2010 to 4.70 in July 2011 was the longest (period) and biggest (value). Most of it was gradual and based on a supply shortage accentuated by delays in movement of RCN from Africa to India & Vietnam coupled with strong growth in Asian demand. But, the big jump in price from 3.70 in March 2011 to 4.70 FOB in July 2011 was the last straw on the camel’s back. It had disastrous impact on cashew usage in the 2 main importing markets. Prices crashed from 4.70 in July 2011 to 3.70 in Dec 2011. During 2012 there was gradual drift in price from 3.60 to 3.10 by Dec 2012 (except for a brief spike from 3.40 to 3.80 in Apr-Jun 2012. Over a period of 18 months (from Jul 2011 to Dec 2012), the market gave up 80% of what it gained in 15 months (from Mar 2011 to Jul 2011).

D) During 2013 and 2014, market has been moving sideways in the 3.20 to 3.50 range except for a brief period in Sep/Oct 2014 when business was done in the 3.50-3.70 range

E) There were 2 big crashes in the last 10 years for different reasons. The crash in 2008 was due to the global financial crisis. The crash in 2011 was because of “demand destruction” due to the very high prices. In all the other years, cashew prices have been moving up or down gradually with periodic spikes and dips. The long term trend has been upward shift in the trading range as we will see at the end of this report.

F) In the last few years, there has been a power shift on both sides of the cashew market – supply and demand. India is no longer the largest supplier to the world market – that position has been taken by Vietnam for kernels and West Africa for RCN. On the demand side, USA & EU continue to be large buyers but they have been overtaken by Asia which is now the largest consuming region (India is the largest consuming country). This has altered the market dynamics – relative power of each region to determine market trend has changed. It is now much more a spot & nearby market – activity in many more origins and markets influence the price than in the past.

G) Another interesting aspect has been the price differential for broken grades. Historically, Splits have been at a discount of less then 50 cents per lb to W320 and Pieces have been 10-15 cents below Splits. This differential widened to over 1 dollar between W320 & Splits and over 50 cents between Splits & LWP during 2012, 2013 and first half of 2014. This was a combination of (1) lower usage due to the very high prices in 2011 and (2) increased availability due to mechanisation of processing. Improvement in processing did bring down the production of brokens but it took some more time to use up the built up inventory. By middle of 2014, differentials started to narrow and now we are back to traditional levels !!!

H) If we remove the aberrations of 2008 and 2010/2011, we will see that cashew market has moved in following range :

2.00 to 2.50 from 2005 to 2007
2.50 to 3.00 from 2008 to 2011
3.00 to 3.50 from 2012 to 2014

What will be the range for 2015 ???

In the last few years, RCN prices have moved to a higher range and there is increase in processing costs also. There is very little growth in production and there is steady growth in usage due to relatively stable prices (compared to other nuts). We expect that range in 2015 would be slightly higher – say 3.25-3.75 or (even 3.50-4.00 if there is good buying interest in the first quarter leading to steady RCN prices during 2015).

WOULD APPRECIATE YOUR COMMENTS, VIEWS, THOUGHTS FOR A BETTER UNDERSTANDING OF THE MARKET PROSPECTS

]]>https://samsons.co.in/2015/01/05/cashew-price-analysis-2005-to-2014-jan-2015-2/feed/419.074721 72.83422919.07472172.834229psampatCashew Market Report – Nov 15, 2014https://samsons.co.in/2014/11/16/cashew-market-report-nov-15-2014/
https://samsons.co.in/2014/11/16/cashew-market-report-nov-15-2014/#respondSun, 16 Nov 2014 08:00:44 +0000http://samsons.co.in/?p=393More Cashew Market Report – Nov 15, 2014]]>Cashew market started moving up slowly from mid Aug and moved up sharply during
Sept. There was good demand from all markets till early Oct. Highest levels traded were W240 at 4.05 to 4.15 and W320 at 3.60 to 3.70 FOB. Market has been quiet since middle of Oct. In the last 3 weeks, prices came down a few cents from the large processors and more from the small / medium processors.

In Weeks 45 & 46, offers / trades were in the range of W240 from 3.75 to 3.95, W320 from 3.40 to 3.55, W450 from 3.30 to 3.45, SW320 from 3.35 to 3.45, Butts from 3.10 to 3.25, Splits from 2.95 to 3.05 and Pieces from 2.85 to 2.95 FOB.

RCN market moved up between Aug to mid Oct. In 2 months, prices for West Africa RCN (harvested from Mar/Apr to Jun/Jul) moved up from 1150-1250 range to 1350-1550 range. Tanzania RCN (harvest from Oct to Dec/Jan) started trading around US$ 1600 C&F. In the last 2-3 weeks, this has come down to US$ 1425-1450 C&F. Even at this lower level, there is a disparity of 15-20 cents per lb. If processors are not able to sell kernels at higher prices, they may be slow in buying RCN – this might lead to some reduction in RCN prices but reduction will not be much since availability is limited because the Southern crop is small in quantity (less than 25% of world production).

Cashew continues to be the most reasonably priced nut moving in a relatively narrow range (compared to other nuts). It would be reasonable to expect prices to remain in this range and maybe even move up a bit – depending on buyer behavior. Will they continue to buy in small tranches which will keep market steady ? Will they buy larger volumes or longer spreads which will push market up a bit ??

For the time being, many buyers seem to be waiting to see how market moves in coming weeks before buying more since they have bought some quantities during Aug/Sep and because prices have slipped from the peak. But, some are still buying part of their requirements from reliable processors (even at higher levels).

Although we cannot be sure how market will move, specially in an uncertain situation like we have now, our feeling is that cashew kernel market will remain in range of 3.40 to 3.70 for next 3-4 months (maybe more). Prices may even move up a bit more during this period. There are very little chances of any significant decline unless the next Northern Hemishpere (India, Vietnam, West Africa) crops which contribute 75% of World Production are all very good. Even then, prices may not come down until there is a smooth flow of RCN from West Africa to India and Vietnam. It is quite possible that in 2015 we will see a different range compared to the 3.25-3.50 range that we have seen for more than 2 years now.

Would appreciate your comments on market situation, views and forecast of trend for coming months and any news / information / observations on supply and demand side…. And your interest !!